The following is a summary of the key moments that
transpired during the U.S. House Subcommittee on Telecommunications
and the Internet hearing on Virtual Worlds held April 1, 2008. This
marked the first ever simulcast of a Congressional hearing into a
virtual world – a truly historic moment.

Spanning the positive uses of virtual worlds (entrepreneurial,
non-profit, educational, and other purposes) as well as the
security implications (terrorism, child protection, privacy and
illegal activities) the first-of-its-kind hearing finally came to a
close at 11:15 AM this morning after nearly two full hours of
position statements and riveting Q&A.

Subcommittee members’ opening speeches covered general
statistics, implications, applications and potential futures of
virtual worlds. Subcommittee Chairman Ed Markey of Massachusetts
(pictured second) noted that virtual worlds often permit people to
do things that are often impossible in real life, thus empowering
individuals and that virtual worlds are at the cutting edge of web
2.0 applications. As per the future of virtual worlds, the Chairman
said that virtual worlds are steadily becoming more commonplace and
therefore policymakers will have to continue to monitor them as
they grow further while upgrading national infrastructure to foster
the positive utilities of such worlds.

Congressman Stearns of Florida (pictured third) cited an
interesting statistic in his opening remarks, that 40% of men and
50% of women see virtual friends as equal or better than their
real-life friends. He found this a bit unsettling, and elucidated
his concern for sexual predators and con-men inevitably finding
their way into virtual worlds, as they did the internet.

Congresswoman Harman of California echoed many of the same
positive implications of virtual worlds, but seemed most concerned
with the use of virtual worlds by Islamic militants, noting that a
“clear-eyed understanding is essential” in helping fight this new
wave of “transient terrorism.”

(cont.)

Congressman Shimkus of Illinois (pictured fourth) noted that the
word “avatar is a Hindu or Buddhist name for God” which he said has
always caused him some concern, while Congresswoman Eshoo of
California (pictured fifth) was excited about the transformative
nature of virtual worlds and their potential to tap the human
desire to socially interact.

In addition to his deep concern for the well-being of children
in virtual worlds, Congressman Stupak of Michigan raised an
interesting concern in his opening statement regarding the
potential for psychological addiction to virtual worlds.

After Congressman Green of Texas promoted the business and
political utilities of virtual worlds, Congressman Doyle of
Pennsylvania said that it informed the net neutrality debate,
arguing that instead of limiting bandwidth, net neutrality
positions should instead aid the building of infrastructure that
harbors such positive non-profit access and entrepreneurial
spirit.

The first witness to speak was Second Life founder and long-time
CEO (though he is due to relinquish the
role once a suitable replacement is found) of Linden Labs, Philip
Rosedale (pictured first). Rosedale gave an brief overview of
virtual worlds complete with a machinimatic video presentation and
continued to explain what he noted as the vast commercial,
scientific, and social potential that lies in virtual spaces. On
behalf of Linden Labs, he said that they believe “virtual worlds
hold great promise for America” as a multi-tiered communications
platform with low barriers to entry and the ability for
collaboration over long distances. They’re “poised to do what the
telephone, email, and internet all did” by exponentially increasing
personal productivity. Virtual worlds are economically “vital to
America’s growth” in opportunities related to business, and thus,
the U.S. “should continue the technological leadership” to make
Second Life and other virtual worlds ubiquitously accessible.

Following Rosedale, Susan
Tenby, Online Community Manager of TechSoup.org, Dr. Colin
Colin J. Parris, Vice President of Digital Convergence IBM Research and Larry Johnson, CEO of The New Media Consortium all echoed many of
the same sentiments.

Tenby and Johnson spoke to the far-reaching non-profit and
educational activities current and possible in Second Life, while
Dr. Parris explained how IBM as a company
extracts business value through the use of Second Life, noting
examples that included virtual job training, team collaboration,
simulation-based instruction, marketing and pre-sales activities,
as well as improved customer relations and satisfaction.

A bevy of interesting questions were raised by the delegates
during the ensuing Q&A session. In addition to some playful
discussion covering where the name Linden Labs stemmed from (the
street on which the company was first located), whether any
presidential candidates are utilizing Second Life (not to
Rosedale’s knowlege) and a back-and-forth on virtual versus real
life identities, most of the questions posed were related to the
security risks inherent in virtual worlds.

When asked to comment on the rights and protection of consumers
in virtual economies, Rosedale responded that virtual world
activities and transactions are in fact much more easily monitored
than those in the real world and that it is relatively easy to spot
fishy transactions due to the microtransaction environment.
Speaking to Second Life policy, Linden Labs manually checks every
transaction over $10 US. Rosedale believes it is a model for
legitimate transactionas as they have maintained a fraud rate on
billing systems over the past few months at 0.2%, whereas the
industry standard rests at about 1%.

Many of the same arguments were made by Rosedale in response to
a question by Congresswoman Harman on the potential for “Virtual
Jihad” and what the U.S. can do to “make certain that these
glorious tools are not abused or changed into tools used to commit
terrorism.” Rosedale explained that due to Second Life’s
tried-and-true processes for extracting money and recording of
activities, account records are easily tracked down and much more
easily policed than on average websites.

Johnson added to this point by saying that the one thing he has
come away with is a tremendous sense of how much virtual world
users regard their community and that the strongest asset of
defense is this dedicated user base. In his experience, community
members are not shy about sharing what they have witnessed if
improper acts have occurred – unlike in RL.

Regarding the security of minors in Second Life’s teen-exclusive
virtual space and the potential for predators, Rosedale responded
that Linden Labs screens as extensively as they can, taking child
protection very seriously. Due mostly to in-world self-policing and
initial identification requirements, they have never identified any
behavior that has warranted stricter policing, nor have they
collaborated with government security officials to this end, said
Rosedale. However, in the adult spaces they have worked closely
with the FBI regarding potential
cybercrimes, etc.

Responding to the question of whether a user “could be logged
onto virtual worlds for too many hours a day?” by Congressman
Stupak, Johnson responded that such is a legitimate concern
discussed frequently by educators that spans the entire video game
market as well. However, in his experience, Johnson has never seen
reason to be alarmed. Rosedale remarked that this issue is more
complex than one may think and depends largely upon what activities
the user is engaging in. If a child is gaining real-world
experience from setting up a lemonade-stand equivalent venture in a
virtual world, this is much different from just playing or shooting
monsters, as one would in a video game. Therefore, he believes this
debate deserves sensitivity to the type of interaction users are
having, and noted that Linden Labs poses no restrictions on what
users do or how much time they spend in Second Life.

A bit of heated commentary surfaced on behalf of Senator
Shimkus (who called himself a “pro-market competitive republican”
and a “Christian fundamentalist”) seemingly in response to
Rosedale’s remarks on the positive correlation between pervasive
broadband access and the use of virtual worlds, using Japan as an
example of such a positive, wired environment. The Congressman
strongly defended U.S. internet connectivity rates with statistics
such as the U.S. representing 1/3 of worldwide broadband users,
although he presented no statistics regarding the total percentage
of U.S. citizens who have access to broadband and relied on solely
numerical scores. He also asked Rosedale to speak to the use of
Second Life by religious groups and pro-democracy advocates, to
which Rosedale responded that both groups were present and very
active. Lastly, Congressman Shimkus also asked Rosedale why he was
barring access to the live feed of the Congressional hearing and to
agree that sometimes certain amounts of “network management is
necessary in certain services.” Rosedale politely agreed with the
Congressman, but explained that the limited access to the viewing
of the Congressional hearing was solely due to pragmatic,
space-related issues.